Source: STAT News
Health care figured prominently in the first year of President Trump’s second term, and it’ll likely play an even bigger role leading up to the 2026 midterm elections.
The shift back to health care politics has been somewhat surprising. Although Republicans were expected to use Medicaid funding cuts to pay for their tax bill this year, it was not clear a year ago how crucial health care policy would become to Democrats’ campaign strategy.
The tax law cuts more than $1 trillion from health insurance spending over a decade, mostly from Medicaid, to help pay the projected $4.5 trillion cost of tax cuts, according to the nonpartisan Congressional Budget Office.
The tax bill would’ve been an appropriate vehicle for renewing the enhanced Affordable Care Act premium tax credits, but Republicans did not include an extension.
With President Trump’s tariffs causing inflation to tick up, Democrats tied the Medicaid cuts and expiring ACA subsidies to voter frustrations over rising prices in an attempt to turn the tables on Trump, who ran on a promise of improving the economy.
Meanwhile, Trump made major announcements about lowering drug prices, but many of the details have yet to be worked out or announced, leaving loose ends for next year.
And there are also bipartisan health care reforms that could be revived.
With that, here are the three health care policies that will matter to politics in 2026:
The cost of health insurance
The health insurance costs for about 22 million people are set to significantly increase in2026, because the extra ACA subsidies that Democrats first provided during the pandemic expire on Dec. 31.
Democrats failed to extend the subsidies during the government shutdown and at the end of 2025.
Still, the House is supposed to vote on a clean three-year extension early next year after four House Republicans joined Democrats to force a vote. That was an unexpected development, and it demonstrates how Democrats have been able to keep a spotlight on the cost of health insurance.
However, Democrats’ effort could backfire if Republicans, forced to do something to control health care costs, use a process called budget reconciliation to pass health care reforms that Democrats oppose. A budget reconciliation measure can be passed with a simple majority, allowing Republicans to go it alone, just as they did to pass their tax bill over the summer.
Senate Republicans proposed a plan to put more money into health savings accounts linked to ACA plans, but it did not pass.
Then, House Republicans introduced a bill focused on expanding access to employer-sponsored insurance. About 7% of Americans have ACA marketplace insurance, and House Republicans say Congress should focus on controlling costs for the roughly 60% of people who get coverage from their employer.
That bill, which passed in a party-line vote, does not include either the enhanced ACA premium subsidies or funding for the ACA health savings accounts that Senate Republicans want, and it’s not clear what the next steps for the Senate may be.
Drug prices
Trump revived efforts to lower drug prices from his first term with a series of deals that use multiple policy levers and the threat of tariffs to get companies to bring U.S. prices inline with other rich countries. Fourteen companies have struck deals.
But the policies aren’t yet in place, the deals are voluntary, the details haven’t been made public, and the threat of tariffs is uncertain. Some companies have also agreed to offer drugs directly to consumers via the TrumpRx website. That site is supposed to go live at the start of 2026, though many details are unclear.
Industry is closely monitoring pilot programs that are supposed to lower prices in Medicare and Medicaid to levels abroad, a policy referred to as most-favored nation. The administration proposed two mandatory models in Medicare, one for retail drugs in Part D and one for physician-administered drugs in Part B. Some analysts have raised the question of whether companies that struck confidential side deals with the administration will be subject to those payment models, based on conversations with those firms. That could be cleared up in the final version of the rules for the demonstrations.
The demonstrations will likely be challenged in court, but industry analysts believe they stand a decent chance of withstanding lawsuits.
The administration also announced a Medicaid pilot. There is no proposed rulemaking yet for the Medicaid model but there is information about how that pilot would work in the requested applications for drugmakers to participate.
Industry is less concerned about the Medicaid model because that program already pays close to prices other countries pay, and the application request makes clear that sometimes Medicaid pays less than prices available in other countries.
In Medicare, however, companies have a lot more at risk.
“Thus far, I would say the industry appears to have been trying to work with the administration on its drug pricing policies,” said John Barkett, the managing director of BRG’s Healthcare Transactions and Strategy practice. “I think pursuing MFN for Medicare drugs could potentially disrupt that collaboration.”
Tariffs are another complicating factor. Trump targeted imported brand-name drugs with100% tariffs, and said he would exclude drugmakers that cut deals and build domestic manufacturing facilities from those tariffs.
However, the threat of tariffs is difficult to predict, Barkett said. The administration said it will honor existing trade agreements, including recent E.U. and Japanese compacts that limit pharmaceutical tariffs to 15%. Also, the Supreme Court is reviewing the legality of using the International Emergency Economic Powers Act (IEEPA) to impose tariffs on countries, after lower courts ruled against them. Those IEEPA tariffs are separate from the pharmaceutical tariffs, but the administration might lean harder on pharmaceutical tariffs if it loses the ability to impose IEEPA tariffs.
“If that leverage were to change, it may have ramifications that may be hard to see,”Barkett said of the IEEPA tariffs.
The Inflation Reduction Act’s Medicare drug price negotiation program also will present multiple challenges in the coming year.
Drugs that are administered by physicians will be eligible for Medicare negotiation for the first time in 2026. Only Part D retail drugs were subject to negotiation in the first two rounds, and the addition of Part B drugs presents challenges.
The selection of Part D drugs was fairly straightforward because Medicare gets the same detailed records of health care services, called claims data, on all retail drugs. In Part B, the process is more complicated. Medicare has spending amounts for Part B drugs that are administered and paid for by traditional Medicare, Barkett said. But the government does not know the prices for Part B drugs covered by Medicare Advantage plans, which enroll more than half of Medicare beneficiaries, though Medicare does get utilization data on those drugs.
Next year, negotiated prices will take effect for the first round of 10 drugs subject to negotiation last year, and it’s not clear yet how that will be implemented. This is an area of concern for pharmacies, who are worried that the new system could hurt their cash flow.
The law requires that drugmakers make negotiated prices available to pharmacies, but it’s not clear how the system will work, according to Stephanie Trunk, the co-leader of ArentFox Schiff’s Life Sciences Industry Group. Under the current system, pharmacies typically pay list prices and insurers pay back the difference between the list price and the lower prices negotiated by pharmacy benefit managers. That process typically takes up to two weeks.
Under the new system, it could take at least a week longer for pharmacies to get reimbursed because there will be a new third party charged with truing up the difference, Trunk said. The new system has yet to be tested.
Some pharmacies have said they might not stock drugs for which Medicare has negotiated prices. The 10 drugs with Medicare-negotiated prices in 2026 include insulin products, Eliquis and other products commonly used by seniors.
“It’ll be interesting to watch for any fallout from the implementation of those MFPs, ”Trunk said, referring to the maximum fair prices that Medicare negotiates.
Revisiting the 2024 year-end deal
Republicans and Democrats last year negotiated a health care deal replete with PBM reforms, a Medicare pay hike for doctors, drug patent law changes, a measure to speed generics, and the beginnings of what could lead to a cut in pay for hospital inpatient services.
That deal abruptly fell through after Elon Musk attacked the government funding bill that contained those measures.
It could come back up, possibly as part of a government funding deal at the end of January, lobbyists say.
A lot of work was put into the deal last year, and the PBM reforms took years to agree on. Measures included in the 2024 deal would prohibit PBMs from linking their payments to drug prices in Medicare, increase transparency, and regulate how PBMs get paid for drugs by Medicaid programs.
PBM reforms are separately being considered in both the House Republican alternative to expanding ACA tax credits and a bipartisan House proposal
to extend enhanced ACA premium subsidies by one year.
A separate measure on pediatric cancer research that also was part of last year’s deal came up as a stand-alone bill in the Senate late in 2025. Sen. Bernie Sanders (I-Vt.) blocked that bill, the Mikaela Naylon Give Kids a Chance Act, because he wants to keep intact the deal from last year.
“I believe that we must revive that bipartisan agreement that was worked on month aftermonth after month by Democrats and Republicans,” Sanders said.
